A property investment expert has claimed if you put on a blindfold, stick a pin into a map of New Zealand and buy a house wherever it landed, you'll make money.
The problem is, prices are getting so high even people with equity in their own home will soon struggle to have enough to buy an investment, says Ashley Church, former head of the Property Institute of New Zealand.
House prices have skyrocketed in the past 12 months. The latest evidence comes from Trade Me, which on Thursday said asking prices were at all-time highs in almost every region, with the median nationwide now $762,700 - slightly above the Real Estate Institute of New Zealand's figure of $749,000.
"Normally what would have happened under this cycle is the Auckland property market flattened off around 2016, 2017, pretty much right on cue - that's what you would have expected if it followed its previous trajectory, which it did," said Church, who recently claimed the housing crisis doesn't exist and that there's little the Government or Reserve Bank can do to cool the market, told Magic Talk on Thursday.
"You would have expected it to have been starting to pick up again sort of midway through 2021, or towards the end of 2021. The fact it started a little bit earlier is unusual, and it's almost certainly to do with the fact we've had that rapid decrease in interest rates over the last few months as a result of COVID. You can safely say the Auckland market has taken off again."
He went on to say there's something different about this particular housing boom.
Usually, "when Auckland goes off the boil, the rest of the country carries on reasonably strongly... it then comes off the boil and Auckland takes off again".
But this time, prices nationwide are going up. Auckland's growth of 10 percent is spectacularly high by historic standards - equating to an annual increase almost higher than the average household income of about $100,000. But it's dwarfed by increases in Manawatu/Whanganui (20 percent), Southland (15) and Taranaki (14).
Church says the Reserve Bank's policy of keeping interest rates low to help stimulate the economy during the recession is encouraging investors to borrow and buy anything they can get their hands on.
"The good thing about the current market is you could probably just about put a pin anywhere in New Zealand - in fact, you could do it with a blindfold - and you're going to be pretty safe."
Church has previously said prices going up is a good thing - because so many Kiwis have their savings tied up in housing, it makes the country wealthier. But others have said it's making housing unaffordable - the latest being ANZ, whose economic team earlier this week said it's time for Kiwis to accept prices need to gradually come down, or they risk a "painful correction".
Even Church admitted property was becoming "almost unaffordable" even for those with equity, but played down talk of a crash.
"People have been predicting crashes for 40 years, every time we get to the last three or four years of the cycle there's always a crescendo of people talking about how this one's different and this time it's gonna crash. They were doing it 10 years ago, they were doing it 10 years before that... Is it possible the market could crash? Of course... is it likely? No."
The Government has said it would like to see house prices continue to rise, but more slowly. ANZ wants more land freed up for building, adjustments to migration settings and the Government to build more social housing, among other things. But Church doubts any of it will work.
"When there's talk of market prices taking off, there's always a call for the Government to intervene or the Reserve Bank to intervene. You've seen the bright-line test, you've seen the ring-fencing of tax losses, the Government stopping foreign buyers - none of those things have made a jot of difference."
